{"id":8268,"date":"2014-08-09T10:26:19","date_gmt":"2014-08-09T04:56:19","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=8268"},"modified":"2014-08-09T21:36:52","modified_gmt":"2014-08-09T16:06:52","slug":"canara-housing-development-co-vs-dcit-karnataka-high-court-s-153a-ao-is-required-to-assess-the-total-income-and-is-not-confined-only-to-income-which-was-unearthed-during-search-la","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/canara-housing-development-co-vs-dcit-karnataka-high-court-s-153a-ao-is-required-to-assess-the-total-income-and-is-not-confined-only-to-income-which-was-unearthed-during-search-la\/","title":{"rendered":"Canara Housing Development Co vs. DCIT (Karnataka High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (canara_housing_153A_scope.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nS. 153A: AO is required to assess the \u201ctotal income\u201d and is not confined only to income which was unearthed during search. Law laid down in All Cargo Global Logistics<\/a> disapproved <\/strong> <\/p>\n

For AY 2008-09, the AO passed an assessment order u\/s 143(3) on 31.12.2010. A search u\/s 132 was condiucted on 12.04.2011 in the course of which incriminating material leading to undisclosed income was seized. The AO initiated proceedings u\/s 153A of the Act calling upon the assessee to file return of income u\/s 153A(1)(a) for six years. The assessee complied with the same. When the said return was under consideration, the CIT passed an order u\/s 263 on the ground that the assessment order dated 31.12.2010 passed u\/s 143(3) was erroneous and prejudicial to the interests of the revenue. The assessee filed an appeal to the Tribunal in which it claimed that as the assessments u\/s 153A were open, the AO could pass appropriate orders thereon. The Tribunal, relying on All Cargo Global Logistics<\/a><\/strong> 137 ITD 287 (SB) (Mum) held that as the s. 143(3) order did not abate and had become final, the AO, in the s. 153A assessment had to confine himself to the incriminating material found during search and could not take into consideration other materials while making the s. 153A assessment. It consequently upheld the CIT\u2019s power to revise the s. 143(3) order. On appeal by the assessee to the High Court, HELD reversing the Tribunal:<\/p>\n

The Tribunal has proceeded on the assumption by virtue of the judgment of the Special Bench in All Cargo Global<\/a><\/strong>, the scope of enquiry u\/s 153A is to be confined only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power u\/s 263. In the entire scheme of s. 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided u\/s 153A of the Act that the AO shall assess or reassess the \u201ctotal income\u201d of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the CIT has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said income also in determining the total income of the assessee when the earlier proceedings are reopened and that income also shall become the subject matter of said proceedings. In that view of the matter the reasoning given by the Tribunal is not justified. The CIT did not have jurisdiction to initiate any proceedings u\/s 263 of the Act (Anil Kumar Bhatia<\/a><\/strong> 352 ITR 493 (Del) referred).<\/p><\/blockquote>\n

Note<\/strong>: See also Why The Special Bench Verdict In All Cargo Global Requires Reconsideration<\/a><\/strong>. For the law whether non-jurisdictional High Court verdict prevails over the Special Bench see Rajamahendri Shipping<\/a><\/strong> (ITAT Vizag). Click here<\/a> for more on the law of s. 153A search assessments<\/div>\n
Update at 1800 hrs<\/strong>: See CIT vs. Murli Agro Products Ltd<\/a><\/strong> (Bombay High Court) which takes a contrary view & holds that no addition can be made u\/s 153A in respect of an unabated assessment which has become final if no incriminating material is found during the search<\/div>\n","protected":false},"excerpt":{"rendered":"


\nS. 153A: AO is required to assess the \u201ctotal income\u201d and is not confined only to income which was unearthed during search. Law laid down in All Cargo Global Logistics<\/a> disapproved <\/strong><\/p>\n

The Tribunal has proceeded on the assumption by virtue of the judgment of the Special Bench in All Cargo Global<\/a><\/strong>, the scope of enquiry u\/s 153A is to be confined only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power u\/s 263. In the entire scheme of s. 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided u\/s 153A of the Act that the AO shall assess or reassess the \u201ctotal income\u201d of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the CIT has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said income also in determining the total income of the assessee when the earlier proceedings are reopened and that income also shall become the subject matter of said proceedings. In that view of the matter the reasoning given by the Tribunal is not justified. The CIT did not have jurisdiction to initiate any proceedings u\/s 263 of the Act (Anil Kumar Bhatia<\/a><\/strong> 352 ITR 493 (Del) referred)<\/p>\n

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